Stock Market Update for Friday March 1st,2024

Global Markets

Global Markets Update: Wall Street Up, European Shares Green, Japan’s Nikkei Hits All-Time High

Wall Street Rally Continues: Following a strong rally in the previous session, fueled by enthusiasm around artificial intelligence (AI) and optimism stemming from an inflation reading that suggested a potential interest rate cut in June, Wall Street opened higher. The bullish sentiment persisted despite concerns about geopolitical tensions and uncertainty surrounding global economic recovery.

European Shares in the Green: European markets also started the day on a positive note, with major indices trading higher. Investor sentiment was buoyed by positive earnings reports from several companies and hopes for continued economic growth as COVID-19 restrictions ease across the continent.

Nikkei Hits Record High: Japan’s Nikkei share average surged to all-time highs, closing nearly 2% higher. The strong performance was driven by optimism about corporate earnings and expectations of robust economic growth in the region. The Nikkei’s gains reflected broader optimism among investors in Asia, with several other major indices posting gains as well.

Gold Prices Tick Higher: Gold prices edged higher as the dollar weakened slightly. Investors turned to the safe-haven asset amid lingering concerns about geopolitical risks and inflationary pressures. The modest uptick in gold prices reflected cautious sentiment in the markets despite overall positive trends.

Oil Prices Rise Ahead of OPEC+ Decision: Oil prices climbed as markets awaited a decision from OPEC+ on supply agreements for the second quarter. The outcome of the meeting is expected to have significant implications for global oil markets and could impact prices in the near term.

Data Releases: Later in the day, investors awaited key data releases, including manufacturing Purchasing Managers’ Index (PMI) figures and consumer sentiment data. These indicators would provide further insights into the health of the global economy and could influence market sentiment going forward.

Canada’s Main Stock Index Gains: Canada’s main stock index posted gains, tracking a rise in oil and gold prices. The positive performance was driven by strength in the energy and materials sectors, which benefited from higher commodity prices.

European Company News Highlights:

• Switzerland’s competition commission favored a deeper investigation into UBS’ dominance of certain market segments following its rescue of Credit Suisse last year.
• Shares in British Airways owner IAG and Air France-KLM dropped due to concerns over costs, supply chain disruptions, and geopolitical risks despite strong 2023 results.
• Birkenstock warned of margin pressures from costs associated with global expansion despite reporting strong demand for its footwear.
• Elon Musk sued OpenAI and its CEO Sam Altman for breach of contract, alleging violations of agreements made during his involvement with the company in 2015.

Corporate Earnings

1. Aegon Ltd: Reported a 32% drop in second-half operating profit, which disappointed investors and led to a decline in the Dutch insurer’s shares. Despite a strong performance in its largest market, the United States, operating earnings fell due to the absence of one-time benefits recorded in the previous year.
2. Autodesk Inc: Forecasted annual revenue above Wall Street estimates, driven by resilient demand for its design software products. The company expects fiscal 2025 revenue to be in the range of $5.99 billion to $6.09 billion. However, the forecasted annual adjusted profit per share fell slightly below analysts’ estimates.
3. Cooper Companies Inc: Raised its annual revenue forecast after beating Wall Street estimates for quarterly sales, supported by robust demand for its contact lenses. The company expects 2024 revenue to range between $3.84 billion and $3.90 billion, surpassing analysts’ estimates.
4. Dell Technologies Inc: Forecasted annual revenue and profit above Wall Street estimates, betting on demand for its artificial intelligence servers. Although the company posted an 11% drop in revenue for the fourth quarter, it reported a profit per share that exceeded analysts’ expectations.
5. Fisker Inc: Warned of potential challenges ahead, indicating that it might not be able to continue as a going concern. The company reported preliminary revenue for the fourth quarter that missed analyst estimates, leading to a widened net loss.
6. Hewlett Packard Enterprise Co: Forecasted second-quarter revenue below Wall Street estimates, attributing it to reduced spending by businesses on the company’s technology solutions. Despite reporting an increase in annualized revenue run-rate, first-quarter revenue fell short of estimates.
7. NetApp Inc: Raised its annual profit forecast, driven by increased spending on cloud-based data management services for digital transformation. The company expects full-year 2024 adjusted profit per share to exceed its prior range and reported fourth-quarter net revenue slightly above analysts’ estimates.
8. Pearson Plc: Reported boosted profit and cash flow in 2023, enabled by strong demand for its English language courses and a higher margin in its exams unit. The company expects continued growth in operating profit for the current year.
9. Zscaler Inc: Reported higher operating expenses in the second quarter, overshadowing an increase in its annual revenue forecast. Despite the rise in expenses, the company expects strong revenue for the year, although its shares declined due to the earnings report.

Top Analyst Ratings:

1. Best Buy Co Inc: JPMorgan has raised the target price to $89 from $78, citing expectations of continued industry stabilization in 2024. The company is anticipated to benefit from entering the COVID replacement cycle and an improving macroeconomic outlook.
2. Birkenstock Holding Plc: Piper Sandler has raised the target price to $61 from $56.5, emphasizing the strength of the brand, product, and distribution strategy, as evidenced by the company’s first-quarter results.
3. Dell Technologies Inc: Bernstein has raised the target price to $120 from $90, reflecting the company’s solid fourth-quarter results and significant progress in key metrics within its AI business segment.
4. New York Community Bancorp Inc: Piper Sandler has downgraded the rating to neutral from overweight due to the replacement of the company’s CEO and disclosed faults in its financial reporting, signaling potential challenges ahead.
5. Zscaler Inc: RBC has raised the target price to $265 from $260, following the company’s upward revision of its 2024 forecasts, particularly in revenue growth and operating margins.
6. Atco Ltd: RBC has raised the target price to C$46 from C$45, driven by the company’s strong fourth-quarter results and encouraging performance in the Structures and Logistics business segment.
7. Canadian Natural Resources Ltd: RBC has raised the target price to C$100 from C$94, highlighting the company’s strong leadership, shareholder alignment, robust free cash flow generation, and exceptional operating performance.
8. Kinaxis Inc: CIBC has lowered the target price to C$180 from C$185 due to lower-than-expected 2024 Software as a Service (SaaS) guidance, signaling potential challenges in achieving projected growth targets.
9. Stantec Inc: CIBC has raised the target price to C$120 from C$116, following the company’s solid organic net revenue growth in the fourth quarter, reflecting positive momentum in its business operations.
10. WSP Global Inc: CIBC has raised the target price to C$239 from C$234, driven by the company’s strong operational performance and record order intake in 2023, indicating confidence in its future growth prospects.